Verizon is said to be near a deal to acquire Yahoo
The end of Yahoo as an independent company may be near, and Verizon — long considered the leading contender to buy the aging Web pioneer — is the most likely acquirer.
The two companies are in advanced talks over a takeover of Yahoo that could be worth close to $5 billion, a person briefed on the matter said Friday.
Any transaction would be for the Sunnyvale company’s core Internet business, although it is unclear whether a deal would also include other assets like real estate or patents.
Both companies are hoping to announce a deal by next week, this person said. Verizon is scheduled to report earnings Tuesday.
However, no final deal has been reached and the talks could still falter, the person cautioned. One of the other finalists could also come back with a higher bid.
A spokesman for Verizon declined to comment, while a Yahoo spokeswoman said the company would not comment “until we have a definitive agreement to announce” because it wants to maintain “the integrity of the process.” The state of discussions between Yahoo and Verizon was initially reported by Bloomberg.
When Yahoo finally began exploring a sale of its core business — a sprawling collection of properties including its sports and news sites, email and the social network Tumblr — Verizon was considered the front-runner by analysts and investors. The telecommunica-
tions behemoth already owns AOL, another onetime Internet darling that had fallen far from its peak.
Bankers for Yahoo cast a wide net for the auction, and a number of potential suitors emerged. The field winnowed down to a handful of bidders, which included AT&T, privateequity firms like TPG Capital, and Quicken Loans co-founder Dan Gilbert, with the backing of Warren Buffett’s company, Berkshire Hathaway.
But people involved in the process long believed that Verizon, with its enormous cash pile and its ability to wring out efficiencies by merging Yahoo with AOL, was the most likely winner.
Brian Wieser, an analyst with Pivotal Research, said that combining AOL with Yahoo would create a stronger No. 3 digital platform for online advertising, after Google and Facebook.
“This is a 1 plus 1 equals 2½,” he said.
Verizon, which had $132 billion in revenue last year, has been trying to build up its digital content portfolio, particularly in mobile and video, to serve customers of its wireless phone, cable TV and Internet businesses. Last year, it bought AOL for $4.4 billion, acquiring not just its content sites like the Huffington Post and TechCrunch, but also the advertising technology used to tailor online ads to Internet users.
Yahoo would bring in a huge amount of additional news, sports and finance content — and the 1 billion people a month who visit Yahoo services — and would offer Verizon another set of sophisticated ad technologies.
Yahoo’s BrightRoll division in particular is a leader in delivering automated, real-time advertising, and it could be merged with AOL’s ad technology to deliver more appealing options to marketers, particularly in video.
“They’re not going to be anybody’s first port of call,” Wieser said. “But they will have a deeper set of data than anyone except Facebook and Google.”
Verizon also has vast resources that could help it compete for exclusives on valuable streaming content like live sports.
Any purchase of Yahoo carries some real risks. Integrating ad platforms is a complex challenge, usually plagued with delays.
The companies also have a different incentive structure for their advertising sales forces, according to Wieser, and unifying them could be disruptive.
AOL and Yahoo are longtime competitors, dating to the early days of the Web. Tim Armstrong, the head of AOL, has also been a rival of Yahoo CEO Marissa Mayer since the days when they both worked at Google.